JOSEPH W HEIN, JR, Claimant

An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJ. Based on its review, the commission makes the following:

The claimant filed claims for unemployment benefits for weeks 47 of 1997 through 23 of 1998. In each of those weeks he answered "no" to the question, "Are you self-employed?" in spite of the fact that he was in the process of attempting to start his own business.

The issue to be decided is whether the claimant concealed from the department any material facts relating to benefit eligibility when filing a benefit claim in the above-referenced weeks and, if so, what forfeiture should be imposed as a result.

The claimant stated that, at the time he initiated his claim, he contacted the department and told a claims specialist that he was starting up a business and wondered how this would affect his unemployment. The claimant stated that the claims specialist asked him if he was getting any money and whether he was still looking for a job, to which he responded that he was not getting any money and would still look for a job. According to the claimant, the claims specialist told him that, under those circumstances, he would not be considered self-employed. The claimant stated that he therefore responded "no" to the self-employment question. He indicated that he tried to follow the rules and did not intentionally lie to the department.

Although a claimant may be eligible for benefits while self-employed, provided that he is actively seeking suitable work, it is not correct that a claimant who is earning no money and is seeking other work is not considered to be self-employed. A fraud investigator for the department appeared at the hearing and testified that he has prior experience as a claims specialist and would never tell a claimant not to report being self-employed under the circumstances in this case. A claims supervisor for the department agreed that the claimant should not have been told he did not have to report his self-employment. She acknowledged, however, that there is considerable turnover among claims specialists and that mistakes do occur.

In order to impose a forfeiture on a UI claimant, the burden of proof is on the department to present clear, satisfactory and convincing evidence of fraud. Sylvia M. Lubow v. LIRC, Washington Cty. Cir. Ct., Case No. 91-CV-427, January 30, 1992. A forfeiture of benefits may not be imposed against a claimant who makes an honest mistake, but only for a wilful act of concealment, not due to ignorance or lack of knowledge. There must be an intent to receive benefits to which the individual knows he is or she is not entitled.  Candace K. Pitts (LIRC, May 25, 1995);  Sue A. Krueger v. LIRC and General Motors Assembly Division, Case No. 81- CV-559A, Rock Cty. Cir. Ct., December 3, 1982.

In this case the department established that the claimant incorrectly represented to the department that he was not self-employed. However, the commission is unpersuaded that the claimant deliberately and knowingly misrepresented his employment status. The Handbook For Claimants does not contain any definition of self-employment, and the commission believes that a layperson who is not earning any income might reasonably form the opinion that he is not self- employed. Indeed, the dictionary definition of the term "self-employed" is "earning income directly from one's own business, trade or profession rather than as a specified salary or wages from an employer." (1)   While it may be unlikely that the claimant would have received erroneous advice from a department representative, such mistakes certainly can occur. An even more plausible scenario is that the claimant was given the correct information, but misunderstood it. It is not hard to imagine how a claimant, having been told that self-employment is not disqualifying under certain circumstances, could form the mistaken but sincere belief that he is not considered to be self-employed. Given the complexity of the concept of self- employment, and because the burden on the department is a fairly heavy one, the commission is willing to give the claimant the benefit of a doubt in this case, and it concludes that fraud was not established.

The commission therefore finds that the claimant did not conceal a material fact relating to his eligibility for benefits during weeks 47 of 1997 through 23 of 1998, within the meaning of section Wis. Stat. § 108.04(11)(a).

The commission further finds that the claimant is not required to forfeit benefits in the amount of $15,157 which are otherwise payable to him during the period ending June 3, 2006.

The decision of the administrative law judge is reversed. Accordingly, the claimant shall not forfeit $15,157 in benefits that become payable by June 3, 2006.

Dated and mailed December 13, 2001
heinjo . urr : 164 : 1  BR 330

/s/ David B. Falstad, Chairman

/s/ James A. Rutkowski, Commissioner

NOTE: The commission conferred with the administrative law judge about witness credibility. The administrative law judge indicated that he did not believe the claimant was given erroneous advice by the department, since it is obvious that self-employment issues must be investigated. However, the commission finds it possible that the claimant did receive erroneous advice or, in the alternative, that he received accurate information which he misunderstood. Because the commission is not persuaded that the claimant understood he was considered to be self-employed and deliberately chose to conceal that fact, it is unwilling to conclude that he engaged in an act of fraud.

cc: 
Attorney Frank A. Gumina
Attorney Peter Zeeh

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(1)( Back ) Webster's Ninth New Collegiate Dictionary, Merriam-Webster, Inc., 1990. (Emphasis added).

uploaded 2001/12/17